Fairstone targeting 10:1 adviser to support staff ratio
Following ABR’s article on Fairstone Group’s Downstream Buyout strategy, we look at the driver behind the firm’s development of a proprietary operating system, creating efficiencies that will see the group operate on a 10:1 adviser to support staff ratio, according to CEO Lee Hartley
Lee Hartley, CEO of Fairstone Group, has a background in eCommerce and IT, where he built operating systems for banks and life insurers. This means he comes to the financial advice market with a fresh and unbiased eye to running an advisory business.
“The research I undertook into the market showed a huge operational bell curve within financial adviser businesses,” Hartley says. “Most advisory firms are very competent at making money on the advisory part of the business but the profits are diluted by their front-ends, back-ends and their technology. That is to say they are good at giving the advice and getting paid for it – and some firms are extremely profitable doing that – but they are not particularly good at finding, attracting and qualifying new customers in a meaningful and accurate way, nor running efficient, cost-effective, technology-driven operations.
This is because business owners are bogged down by regulatory and non added-value issues, and inefficient back-offices with a high ratio of non revenue-earning staff to revenue earners, he suggests. “The technology that underpins the process usually takes one of two forms, either three or four third party applications cobbled together, or a large database running off the biggest computer in the office. There is no real end-to-end technology; while CRM is an alien term.”
Taking the technology used to build systems for the banks and life assurers, Hartley says, Fairstone has created an efficient low cost back-office, with a technology platform that connects the business end-to-end. The benefits of that operating model, he adds, mean the group can “deliver more customers, increased revenues, value from orphan clients and a low cost back-office to increase the efficiency of an adviser firm’s whole operation.”
As an example of how the system creates efficiencies, Hartley explains that using it alongside Fairstone’s centralised resource function, “means we can break the traditional ratio of two back-office staff to one adviser and run on a ratio of 10 advisers to 1 back-office member.” Currently, Fairstone operates on a 7:1 ratio of 230 advisers to 32 administrative and paraplanning staff “but we will look to increase the ratio of advisers as the business grows,” Hartley says.
Hartley claims that, on average, firms using the system are seeing organic growth of 17% year on year. “Also, productivity per adviser among firms brought on board since 2011 has risen from £85,000 per annum to £140,000 per adviser today,” he says. Hartley acknowledges that is partly due to rising markets “but it is largely down to the efficiencies we create through our operational platform,” he stresses.
From cold lead generation…
The platforms technology starts at customer inception, Hartley explains. “Our search engine marketing management system automates 35,000 search terms that we use to identify and capture customers of the type that we want for the products that we want to advise upon.
“We push that cloud of potential customers into a website that we operate called clearmoney.co.uk. That gets them to fill in a form telling us who they are, what they look like as consumers and what they are looking for in terms of their finances.”
The customer is offered a Best Buy Guide at the end of the process, enabling them to self purchase if they want. But the data is also pushed into what Hartley calls Fairstone’s “trainee financial planner pool”, manned by graduates working out of a contact centre environment. Hartley continues, “Within 45 seconds of the customer completing the form, we will contact them offering a free no obligation consultation with a financial adviser should they want one. The contact centre will take the customer through a pre-sale FactFind looking at all the key areas of the client’s financial portfolio and try to open as many areas of interest for the IFAs as possible.”
Through to the adviser…
“The case is then allocated to the most appropriate adviser, based on their product knowledge, skill set, experience and ability to advise clients of particular income and wealth profiles. “We do an intelligent handshake between client and adviser to make sure the client gets the right adviser, for example a customer with a particularly complicated set of pension requirements will be matched up with G60 specialist,” Hartley explains.
“Then we’ll diarise with the adviser where the client would like to meet and send the FactFind though to the adviser.”
As the advice process progresses, the system tracks every product that is sold and not sold. Regular six monthly financial health checks are then put in place for every client. “This provides a means to stay up-to-date with the client’s portfolio and their circumstances and also their family’s circumstances,” Hartley says.
Through to back-office, CRM and ongoing servicing
Every part of the case is available in real time, so Fairstone’s compliance staff can start working on a client case without waiting for a paper-based file to land on their desk. The platform enables remote file checking, remote auditing, and straight-through case submission to product providers, where that’s available.
“Our CRM system tags every call, email or piece of correspondence against the client file. So we have MI on everything and then we go into the CRM cycle to ensure the client is reviewed appropriately according to the level of customer service that they’ve taken,” Hartley says.
Clients receive a regular newsletter and through the client portal they can update their client record electronically as well as view all of their holdings in real time.
The company does use some plug-ins to the operating system, such as Distribution Technology’s Dynamic Planner for risk profiling, as well as research tools from FE. “Where it’s cheaper and easier to plug in than build it ourselves we will do that,” Hartley says.
“Everything is handled by the one system, from first contact through to completion of sale, compliance case monitoring, and particularly the ongoing CRM. Our system allows us to connect 230 advisers through a web-based platform to 32 members of back-office staff, so we can have a large, national advice base being supported in a very cost effective way.
“It’s not technology for technology’s sake; it’s how we leverage technology to drive cost down for the business and for the client, and how we use technology to acquire new customers and service those customers.”